Burning billions: Europe’s addiction to fossil fuel subsidies must stop

The European Economic and Social Committee (EESC) has delivered a stark but necessary message: fossil fuel subsidies (FFSs) must go. But this isn’t just another green talking point. This  call comes amid a broader strategy aimed at tackling Europe’s ongoing cost-of-living crisis, which the EESC has addressed through a suite of detailed sectoral and umbrella opinions. And while the climate clock ticks louder, the numbers speak louder still – €111 billion in FFSs across the EU in 2023 alone.

Fossil fuel subsidies are not only financially unsustainable, but socially and environmentally damaging. They prop up an outdated energy model, stifle the clean energy transition and contradict the EU’s legally binding 2050 climate neutrality target. Worse still, they funnel public money into a system that disproportionately benefits wealthier households and large polluters, while the social and environmental costs are quietly offloaded onto the public.

“With €80 billion, we could renovate millions of homes, tackle the climate crisis and lift people out of poverty,” says Corina Murafa, rapporteur of the opinion. “Instead, we’re spending that money to lock ourselves into an unsustainable past. It’s time to stop paying to pollute.”

The EESC rightly insists that a just transition must be central to the phase-out. This means removing the most harmful and untargeted subsidies first and introducing tailored, inclusive compensation schemes for vulnerable households and industries. Not all subsidies are created equal: targeted support based on income or business vulnerability may need a more gradual approach – but they, too, must be replaced with incentives that support decarbonisation.

Phasing out these subsidies demands more than political will; it requires clear roadmaps and genuine coordination. The EESC calls on the European Commission to strengthen the European Semester process, requiring Member States to set binding targets and milestones in their National Energy and Climate Plans. This includes both final deadlines and interim steps – essential tools in keeping governments accountable.

Equally vital is the human dimension. The EESC emphasises the need for robust worker protections through collective bargaining and social dialogue. This is not just about economics; it’s about fairness. The transition must not mirror the inequalities of the system it seeks to replace.

Yet definitions matter too. The EU currently tracks only direct subsidies, ignoring the hidden costs of fossil fuel use – from polluted air to crumbling infrastructure. The IMF’s broader methodology, which includes these externalities, puts the real figure closer to $300 billion annually. The Commission must catch up, adopt a clearer, more comprehensive definition of FFSs, and standardise how they’re reported.

As negotiations drag on over the Energy Taxation Directive revision, the EESC is blunt: stop dithering. A stronger directive with ambitious minimum tax rates is crucial, and optional exemptions should be kept to a minimum.

Globally, the EU must push for a level playing field by championing fossil fuel subsidy phase-outs in international fora like the UNFCCC. But it must also clean its own house. No EU funding – from R&D grants to state aid – should bankroll new fossil fuel infrastructure.

Fossil fuel subsidies are a costly anachronism. Europe must move on – and do so with courage, clarity and compassion.

This opinion will also feed into the EESC’s position for COP30, reinforcing the EU’s voice in global climate negotiations. (ks)